Builder confidence in the market for new single-family homes receded in March, largely on concerns about deepening problems in the subprime mortgage arena, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI).
Based on a monthly survey that measures builder perceptions and expectations for home sales, the index dropped to 36 in March from a downwardly revised reading of 39 in February. An index rating above 50 indicates that more builders view sales conditions as good, while a rating below 50 indicates that more builders view conditions as poor.
“Builders are uncertain about the consequences of tightening mortgage lending standards for their home sales down the line, and some are already seeing effects of the subprime shakeout on current sales activity,” said NAHB Chief Economist David Seiders in a statement. ” … NAHB continues to forecast modest improvements in home sales during the balance of 2007, although the problems in the mortgage market increase the degree of uncertainty surrounding our baseline (i.e., most probable) forecast.”
All three component indexes registered declines in March after having risen in the previous month, according to the index. The index gauging current single-family home sales and the index gauging sales expectations for the next six months each declined three points, to 37 and 50, respectively. Meanwhile, the index gauging traffic of prospective buyers declined a single point, to 28.
Regionally, the HMI results were somewhat mixed. In the Midwest and West, the index gained one point to 28 and 36, respectively. In the Northeast, the HMI declined two points to 41, and in the South it fell four points to 40.
